Bitcoin bloodbath: Nouriel Roubini slams institutional investors of 'FOMO', Deepak Shenoy compares m-cap downsize with RBI

Bitcoin (Image: Shutterstock)

American economist Nouriel Roubini on May 19 criticised the institutional investors who invested in volatile pseudo-asset 'Bitcoin' which according to him has no intrinsic value. He also sought that those investors be fired on the spot.

The following reaction by the New York University's Stern School of Business professor comes amid reports of cryptocurrency Bitcoin down by almost 20 percent over the past 24 hours and down to $36,900.

"Bitcoin falls more than 40% from its peak in less than one month. Which institutional investors are reckless enough to invest in such a risky and volatile pseudo-asset with no intrinsic value? They should be fired on the spot if undertaking such a reckless speculative gamble!" Nouriel Roubini wrote on Twitter.

Bitcoin falls more than 40% from its peak in less than one month. Which institutional investors are reckless enough to invest in such a risky and volatile pseudo-asset with no intrinsic value? They should be fired on the spot if undertaking such a reckless speculative gamble!

Nouriel Roubini (@Nouriel) May 19, 2021

This is not the first time the economist has said against cryptocurrency. Roubini on February 23 had said that retail investors with “fear of missing out” are going to get crushed by investing in Bitcoin during its latest run higher, reported Yahoo Finance.

“We have, like in 2017, hundreds of thousands of retail suckers that are having FOMO (fear of missing out) going into this asset class. And they are going to buy it at peak like it happened in December of 2017 when it was $20,000 and fell to $3,000 by the end of the next year. So, it’s the same phenomenon — just people are moving in because of FOMO, feeding the bubble, manipulation, eventually, they’ll get crushed,” Yahoo Finance reported Roubini as saying.

The NYU Stern professor of economics had even argued that Bitcoin’s surge is driven by “massive manipulation,” not a rush into a hedge against inflation.

In December 2020, Nouriel Roubini dubbed Bitcoin and other cryptocurrencies as “sh-tcoins,” which according to him have no place in retail or institutional investor portfolios.

"First of all, calling it a currency — it’s not a currency. It’s not a unit of account, it’s not a means of payment.…it’s not a stable store of value. Secondly, it’s not even an asset," Roubini said.

Among others who have spoken openly on the recent downfall of bitcoin's value include Capital Mind founder Deepak Shenoy. He compared the market cap downsize to half of RBI's forex assets. "Bitcoin's market cap is down some $300 billion+ in a week. That's like half of RBI's forex assets," Shenoy wrote on Twitter.

Here's what Monk Entertainment founder Viraj Seth wrote:

Every time Bitcoin hits an all-time high: "Wish I could've bought more"Every time Bitcoin goes down: "Yeah let's wait for it to go down more"Average life cycle of a HODLer. Viraj Sheth (@viraj_sheth) May 19, 2021

Expressing his views on cryptocurrency and bitcoin, founding partner of Mobius Capital Partners -- Mark Mobius -- had said on May 18 that he doesn’t like is cryptocurrency and called it a “very risky area.”

Mobius had said that it’s difficult to predict the direction of cryptocurrency prices and questioned how easy it is to convert bitcoin and other cryptocurrencies into “real money” that people can spend, reported CNBC. He continued to share his disagreement with suggestions that bitcoin could replace gold as a hedge against inflation.

"I can’t have a crypto ring whereas I can have a gold ring —that’s the real difference," CNBC quoted Mobius as saying.

"It’s a completely different situation and I don’t know understand why people say that bitcoin can be like gold, it’s completely different. Gold is gold and it’s something physical, whereas bitcoin is not," he added.

The following decline in the two most traded cryptocurrencies were sparked last week by Elon Musk's reversal on Tesla taking bitcoin as payment, followed by other tweets that caused confusion over whether the carmaker had shed its holdings of the currency.

Apart from this, China's announcement on Tuesday that it is banning financial institutions and payment companies from providing services related to cryptocurrency transactions, coupled with a warning to investors against speculative crypto trading, seemed to have exacerbated the selling.